Roads

India has one of the largest road networks in the world (over 3.3 million km). The roads carry nearly 70% of freight and 85% of passenger traffic in the country.

Government expenditure on roads in India is significant - 12% of capital and 3% of total expenditure. Investment in the road sector is expected to touch USD 66.50 billion in 2005-07. As per National Highways Authority of India (NHAI), a total of 23,546 kms of roads would be constructed in the next two years. This construction would be conducted under following four programs, namely:

Golden Quadrilateral (Program Under NHAI)

North-South and East-West (Program Under NHAI)

Port connectivity and other projects

Non NHDP (National Highway Development Program) Projects.

The focus of successive Governments on improving road connectivity across the country, has brought about significant investments in road development.

As per a recent World Bank study, the cumulative funding shortfall over the 10 year period is estimated at USD. 23.22 billion , approximating 39% of the total requirement. The funding gap assumes that all the road user charges generated on the highways are returned to the highway sector. If the current proportion of road-user charge revenue is returned (56%), then available funding for highways would be less than the maintenance needs, and the funding gap would rise to USD 39.11 billion.

Connecting India

MP has a well developed transport infrastructure of roads, rails and airports. 5200 km* of National Highway runs across the state with total length of the roads estimated around 67,600 km*.

MP has the 3rd largest network of National highways in the Country after Uttar Pradesh and Rajasthan.

Since MP is centrally located within the country, most of the long haul road traffic in the north-south and east-west direction in the country has to pass through the state.

18 National Highways including trunk routes of Delhi-Mumbai, Delhi-Chennai, Delhi-Bangalore, Delhi- Hyderabad complete their stretch by passing through the State.

State highways are of 9885 kms* length, connecting key urban and tourist centers within the state

In terms of infrastructure, roads in particular has been recognised as the thrust area by the Government of MP.

In order to promote involvement of the private sector in construction and maintenance of roads, the Government has decided to offer projects on a Build-Operate-Transfer (BOT) basis.

Private sector participation initiative has been taken by MP Government as large funding amounts are required for such mega ventures.

Type Of Projects Identified For Private Sector Participation

Considering the usefulness to serve the economy, the intention of the Government is to involve Private Sector for taking up development of following type of projects on State Highways :

(i) By passes

(ii) Bridges

(iii) Railway Over Bridges

(iv) Widening of existing roads

(v) Ring Roads near big cities.

(vi) Improvement/ maintenance of existing roads etc.

There is a significant opportunity for BOT in the national highways segment as they carry more than 40% of the traffic even though they constitute just about 2% of the total road network in the country.

The State Government is also focusing on the development of the National Highways that run through the State to promote the participation of private investors. These works include the following:

Rehabilitation of the roads

Maintenance

Construction of new patches

For NHDP in particular, the private sector has responded enthusiastically. Under this programme, projects valued at over USD 1.33 billion are being implemented. The NHDP has been extended to cover a 50,000 km road network, and these future works will be undertaken on a BOT basis (through toll or annuity).

Government Direct Support

The State Government will identify priority projects, and allow the private sector to design, construct and operate the toll roads. The choice of entry/ exit points may be mutually agreed between the Government and the entrepreneur.

The land for highway development will be acquired by the Government and given to the entrepreneurs on certain terms and conditions for the land.

Tax holiday for five years for road infrastructure development project as per the policy decision of Central Govt.

Other support from Government

1. Project Implementation

The entrepreneurs will enjoy full freedom in carrying out the assigned project. However, they will have comply with certain standards, safety of structures, specifications, satisfactory operations and management as laid by the Government.

The Public Works Department (PWD) will play a major role in approvals and implementation.

2. Registration of entrepreneurs under special category

The State Government has registered entrepreneurs for carrying out work on a B.O.T. basis.

35 firms have already been approved under this category

3. Modification in B.O.T. contract

Further to the inputs received from the entrepreneurs, the contract agreement to be used for the B.O.T. scheme has been modified and made more comprehensive to facilitate smooth working and execution.

Madhya Pradesh Road Policy - Main Objectives

To provide connectivity to villages with a population of more than 1000.

The road network for villages having population less than 500, will be so planned that an all weather road will be available at a distance of 3 km in plain areas and at a distance of 5 km in hilly areas.

Improvement of existing State road network system to 2 lane/ 4 lane roads to cater the need of the projected traffic.

To enhance the road infrastructure in towns and cities.

To effectively utilise the present resources.

To constantly update the highway technology by adopting modern techniques of construction and training of department personnel.

To ensure high standard of road safety and travel comfort

Road Policy

The main aim of the MP Road Policy is to work towards the up gradation of the existing road infrastructure so as to provide an efficient road network system along the length and breadth of the State keeping in mind that the accruing benefits may be passed on evenly to all sections of the society

Government of MP has made recent amendments in the Indian Tolls Act of 1932, so as to encourage private sector participation in mega ventures.

The major roads in the State have been rehabilitated or have been taken up for rehabilitation. The State has come up with road renewal programmes under which maintenance of the existing road infrastructure will be undertaken. The envisaged activities will be according to the following renewal regime:

National Highways - One third of the road length every year

State Highways - One fifth of the road length every year

Major District Roads - One sixth of the road length every year

Village Roads - One eighth of the road length every year

All the major towns and district headquarters are linked with roads having high quality surfacing and riding comfort

An investment destination

The State Government of MP has taken initiatives to improve the condition of the roads on a priority basis. The budgetary allocation for roads has been increased from USD 90 Mn in 2003-04 to around USD 210 Mn in 2005-06.

In the past 2 years, 12,500 kms of roads were constructed which is now projected to increase to 40,000 kms more in the next 3 years

The State Government is encouraging the involvement of private sector to take up the projects on a BOT basis.

These initiatives by the Government are showing immediate results, with the traveling time being decreased significantly.

At present 1000 kms of roads have already been laid down on a B.O.T. basis and construction of another 1100 kms is in progress.

Madhya Pradesh Road Development Corporation (MPRDC) is the nodal agency carrying out all the developmental work in association with the private sector.

It is proposed that MPRDC will carry out the development of 3000 kms of road in the next 3 years with assistance from NABARD and the Central Government.

All the divisional headquarters have been connected to the State capital by road. It is now proposed that all the district headquarters will be connected to the Divisional headquarters.

Way Forward

The State Government has already completed the work on a total of 2977.25 km length of roads with the total cost of USD 361.22 bn*. There are various projects where the Government is seeking private partner investment. Following are some of the identified projects that are proposed to come up in the near future. Many of these high density roads will be developed under BOT/ private development methods. This offers a significant opportunity for infrastructure players to invest in the sector.